Making the right decisions about which dimensions of Environmental, Social, and Governance (ESG) to focus on is essential for any company’s success. A forward-thinking company takes a deep, evidence-based approach to understanding its own business and its potential effects on the environment and society. As more companies embark on their ESG journey, it is helpful to consider ESG progress in the context of a maturity curve. Let’s take a closer look at how this works.
Level 1: Awareness: At level one, companies are just beginning to think about ESG issues in terms of their business strategy and operations. They are still working on gaining a basic understanding of what constitutes good ESG practices, as well as how such practices can benefit their bottom line. Companies at this level may have started to implement some basic policies and procedures related to ESG topics but often lack formal systems for reporting or monitoring performance.
Level 2: Initiatives & Execution: Companies that reach level two have generally implemented an initial set of programs focused on improving environmental and social performance in key areas identified by management. While these programs may not be comprehensive or strategized yet, they can demonstrate progress against specific goals related to sustainability initiatives. Additionally, they have established formal systems for collecting data related to their operations and analyzing it against internal standards and external benchmarks.
Level 3: Performance & Impact Measurement: Level three companies have developed more sophisticated metrics for measuring their performance against ESG initiatives over time and assessing impacts related to those efforts. These organizations understand that they must continuously improve upon their existing processes if they want to continue delivering value through their sustainability efforts. They also recognize the importance of communicating progress with stakeholders by tracking industry trends and engaging with external experts who can provide insight into potential opportunities for improvement along each step of the maturity curve.
As businesses move up the maturity curve from level one (awareness) all the way up to level three (performance & impact measurement), they gain greater insight into how effective their sustainable practices are—and what changes need to be made going forward in order to ensure long-term success. By taking an evidence-based approach when making important ESG decisions, companies can ensure that they are doing everything possible in order to make positive impacts on both people and planet alike. Therefore, having an understanding of the ESG maturity curve is essential when it comes time for a company determine where it wishes would be good versus excellent when it comes down making these important decisions with broader consequences down the road!
